More Chinese Stimulus on the Way?

January 20, 2016

More Chinese Stimulus on the Way?:
With Chinese GDP coming in at an expected 6.9%, the emerging economy officially grew at the slowest pace since 1990. That is a 25 year low and opens up fresh expectations of new rounds of economic stimulus from the PBOC.

AUD/USD initially dropped on the headline, but soon realised that when you’re dealing with a planned economy like China, there is no such thing as a growth concern. With fresh stimulus surely not far away, the Aussie got a kick and US/European equities followed (at least to some extent) throughout the night.

AUD/USD 15 Minute:
Forex chart, AUDUSD 15 Minute, 160120
Click on chart to see a larger view.

New Zealand CPI:


This -0.5% CPI drop was the equal largest since 1998. That sort of a miss will generally give you quite the lunge down and that’s exactly what we see in the above gif in the seconds after the release on the Vantage FX MT4 platform.

Talk of further cuts by the RBNZ at next week’s meeting have already begun.

NZD/USD Hourly:
Forex chart, NZDUSD Hourly, 160120
Click on chart to see a larger view.

We were following some AUD/USD and NZD/USD channels yesterday and as I publish this blog, the Kiwi has moved back inside the channel as price continues to fall.

Just another example where following a trend line breakout, you more often than not just get consolidation rather than the sustained textbook follow through. Price has once again re-activated the original trend line level as resistance and I now look for it to just hug the line in the direction of the original trend.

IMF Update:
Finally, yesterday saw the release of growth forecast numbers by the International Monetary Fund.

The IMF cut its global growth forecast for the third time in less than 12 months, slashing it down 0.2%. Reasons cited by the IMF were an outlook clouded by risks around a strong USD, commodity price uncertainty and Chinese growth concerns.

Read the full IMF World Economic Outlook Update here.

———-

Chart of the Day:
Whether you are a day or swing trader, higher time frame levels are a must have on your charts. We’ve been following this EUR/GBP Channel and the range it had formed at support.

EUR/GBP Weekly:
Forex chart, EURGBP Weekly, 160120
Click on chart to see a larger view.

As you can see on the updated weekly chart, the range top and bottom gave you 2 chances to trade the levels (in both direction) before the upside breakout finally came.

EUR/GBP Daily:
Forex chart, EURGBP Daily, 160120
Click on chart to see a larger view.

Stepping into the daily chart, you can see that following the breakout, price really hasn’t looked back. But things get interesting for the pair again now as we head to this resistance zone that has had plenty of touches in the past.

I like 2 things:
– Moves off the level have been immediate and BIG.
– The zone is tight enough to easily manage your risk around.

Do you see opportunity trading EUR/GBP?

———

On the Calendar Wednesday:
NZD CPI q/q
AUD Westpac Consumer Sentiment

GBP Average Earnings Index 3m/y
GBP Claimant Count Change

CAD Manufacturing Sales m/m
USD Building Permits
USD CPI m/m
USD Core CPI m/m
USD Housing Starts
CAD BOC Monetary Policy Report
CAD BOC Rate Statement
CAD Overnight Rate

USD Crude Oil Inventories
CAD BOC Press Conference

Are you poised to take advantage of the opportunity that this week has presented? Take a look at the Vantage FX MT4 platform and instantly access your own free $50,000 FX demo Forex trading account.

Dane Williams – @VantageFX

Risk Disclosure: In addition to the website disclaimer below, the material on this page prepared by Australian Forex Broker Vantage FX Pty Ltd does not contain a record of our prices or solicitation to trade. All opinions, news, research, tools, prices or other information is provided as general market commentary and marketing communication – not as investment advice. Consequently any person acting on it does so entirely at their own risk. The experts writers express their personal opinions and will not assume any responsibility whatsoever for the actions of the reader. We always aim for maximum accuracy and timeliness, and regulated Forex broker Vantage FX shall not be liable for any loss or damage, consequential or otherwise, which may arise from the use or reliance on this service and its content, inaccurate information or typos. No representation is being made that any results discussed within the report will be achieved, and past performance is not indicative of future performance.

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